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Yes, according to the U.S. Citizen and Immigration Services (USCIS) website, a state-issued temporary license is acceptable.
For Form I-9 purposes, an employee must present original documents that establish both identity and work authorization.
According to the USCIS, a temporary license is an acceptable identity document provided the following is included:
“A state-issued temporary driver’s license is an acceptable Form I-9 List B document if it contains a photograph or identifying information such as name, date of birth, gender, height, eye color, and address. Any conditions on the temporary driver’s license, such as that the expired license must accompany the temporary driver’s license for it to be valid, must be followed.” (Last Reviewed/Updated: 11/25/2014)
You can learn more about completing the Form I-9 in the HR Library or from the Handbook for Employers: Guidance for Completing Form I-9 at the USCIS website.